Two Words Janet Yellen Doesn't Like To See In Same Phrase, Much Less Same Sentence: GDP Anemic. In Any Order -- January 29, 2016

Updates

February 2, 2016: how bad are things going for Janet, and by extension, Hussein? The Fed, apparently, is discussing with US banks on the repercussions of following the Japanese lead (see below) and going to "negative rates." They're calling it a "stress test." The Fed is running out of arrows in its quiver.
 

Original Post

 

This pretty much confirms what "gasoline demand" predicted six months ago. From the Wall Street Journal, U.S. Economy Grew Anemic 0.7% in Fourth Quarter. A sign of flagging momentum amid global weakness and financial market turmoil. Economists surveyed by The Wall Street Journal had expected GDP to grow at a 0.8% pace in the October-to-December span.

And so it goes.

Janet Yellen's decision to "raise rates" last quarter was quite prescient. She's off to a great start.

By the way, did you all see that Japan has lowered its "fed rate"? Yup, the Japanese "fed rate" is now in negative territory: depositors pay banks to hold their money. Ms Yamaguchi will wonder why her 10,000 yen is worth only 9,999 yen a year from now.

Let's see, who's reporting today?

• Chevron misses by 82 cents; took a huge loss vs 46-cent-profit forecast. Not a good day for someone.
• Mastercard reports that its profit rose 11% and shares drop as much as Chevron shares fell; beat by 10 cents, earning 79 cents vs 69 cents forecast.
• Phillips 66 reports all kinds of things: "suffers from sharp drop in refining margins" (did Warren Buffett blow it again?); "profit plunges 43%; reports $1.20 per share vs $1.25 forecast. Wow, not a good day for Warren. We talked about refining margins just two days ago. See this link. When Warren was buying PSX, refining margins were $1.00/US gallon of gasoline; recently, as low as 25 cents. That huge glut of gasoline is the reason no doubt; if the supply of gasoline rises much more, the Japanese will start giving it away for free.

And then it should be interesting to see what Amazon did -- after posting biggest profit in its history, its shares plunge almost 15%. Amazon has recovered a bit; after-hours yesterday Amazon had dropped as much as 15%; this morning, Amazon is down less than 10%.

As I've said many, many times, this is not an investment site. Do not make any investment, financial, or travel decisions based on anything you read here or think you may have read here.

Speaking of travel, by the way, there is an interesting article in this week's issue of The New Yorker, an essay on air travel, "Air Head," by Nathan Heller, a frequent flyer.

Like many frequent fliers, though, I claim to find advantage in basic routine. I know to book a window seat on red-eyes and an aisle in the daytime. I can explain why a 7 A.M. departure from New York is the best flight to California, what snack is safest in Delta's lounge, and which seat is usually the first out. (It's not in first class.) I can mimic the progression of cabin pings and flap extensions in a Boeing, or the hydraulic bark of an Airbus. These skills have narrow applications, but, then, so does CPR. Their goal is to aver the interminable lines and vanished hours that seem, at times, maybe a little worse than death.

No link; if interested, I'm sure one can google it.

Speaking of air travel makes me think of speed which reminds me of the Wall Street Journal yesterday with this headline:  Free Shipping Alone Isn’t Enough: Online Retailers Go for Speed Net-a-Porter runs a fleet of vans and offers same-day shipping in three cities; Everlane ups the ante with one-hour shipping. Long-time readers will remember my post on "the next big thing": Same-Day Delivery -- Original Post. Yes, that was back on November 21, 2013, and it was the stand-alone post on "the next big thing." Yeah, that's pretty cool.

I updated the Bakken wells that will be reported today. And here they are, reported also at another post:

• 29454, 586, Triangle USA, Little Muddy 9H, Williston, t8/15; cum 82K 11/15;
• 30513, SI/NC, MRO, Anton 34-33TFH, Reunion Bay, no production data,
• 31352, SI/NC, EOG, Wayzetta 97-3019H, Parshall, no production data,
• 31467, SI/NC, SM Energy, Herland 14-12HN, Burg,

Wow, that's a nice round number. Exactly 100 wells came off the confidential list through the last business day in January, 2016. Yes, there are two more days in January but we won't know the results of wells coming off the confidential list over the weekend until Monday.

CLR Proposes To Place Another 22 Wells On A New 2560-Acre Spacing Unit In Elm Creek Oil Field -- January 29, 2016

The highlights of the February, 2016, NDIC hearing dockets have been posted. We're starting to see a number of really huge spacing units at 5,120 acres, or eight (8) sections. I understand the need for overlapping units (to capture "orphan" oil along administrative spacing lines) but one could do that with 1280-spacing units, but that would be incredibly inefficient, so the more standard 2560-acre spacing units to solve the problem made all kinds of sense. I'm having trouble understanding why 5,120-acre spacing units are needed.

The Bakken never quits teaching me things.

The other thing we're starting to see is an increased number of wells being placed in one spacing unit. This was expected and had the "Saudi surge/slump" not occurred, "we" would be much farther along in the manufacturing stage.

Here's an example:

• 24881, CLR, Elm Tree-Bakken, 22 wells on an existing overlapping 2560-acre unit, 14/23/26/35-153-94, McKenzie

For newbies, that is a "case" number (#24881), not a permit number.  This is what some folks call a "stand-up" section -- the sections run vertically, north to south (or south to north). The "up and down" was too big to catch in one screen shot, so here it is in two screen shots. If I get it right, the first screen shot will be the two northern sections, and the second screen shot will be the two southern sections.

The northern two sections of the 2560-acre spacing unit:

The southern two sections of the 2560-acre spacing unit, and, "no, I do not plan to correct the typographical error in the graphic below"):

The wells will likely be long laterals, running through two sections. If so, there will be twenty-two new wells along the section line between sections 23 and 26, possibly with 12 of them north of the section line, and 10 of them below the section line, and CLR will probably drill them one at a time using one rig, sort of like they developed the Brooklyn oil field. Roughnecks can set up "home" for about two years drilling out these proposed 31 wells -- and that's why CLR can get accomplished with four (4) rigs when it used to take 20 rigs to get the same amount of work done:

Elm Creek oil field is tracked here.

Back in early December, 2015, I highlighted a particularly active area in Elm Creek oil field.

Active Rigs In North Dakota Hit New Post-Boom Low: 46 -- January 28, 2016

Active rigs:

	1/28/2016	01/28/2015	01/28/2014	01/28/2013	01/28/2012
Active Rigs	46	148	191	190	204

Wells coming off confidential list Friday:

• 29454, 586, Triangle USA, Little Muddy 9H, Williston, t8/15; cum 82K 11/15;
• 30513, SI/NC, MRO, Anton 34-33TFH, Reunion Bay, no production data,
• 31352, SI/NC, EOG, Wayzetta 97-3019H, Parshall, no production data,
• 31467, SI/NC, SM Energy, Herland 14-12HN, Burg,

Five (5) new permits --

• Operators: XTO (4), Hess
• Fields: Bear Creek (Dunn), Alger (Mountrail)
• Comments:

Three (3) producing wells completed:

• 26772, 2,058, Zavanna, Double Down 24-13 2H, East Fork, t1/16; cum -- 
• 26773, 687, Zavanna, Double down 24-13 3TFH, East Fork, t1/16; cum --
• 28895, 1,135, Zavanna, Blackjack 24-13 2TFH, East Fork, t1/16; cum --

Operator Transfer: Whiting transferred about 78 wells to White Rock Oil & Gas, LLC; see this note back on October 16, 2015, when Whiting transferred about 50 older wells to White Rock Oil & Gas, LLC. Some data points about these 78 wells/permits:

• oldest: 06756
• most recent: 29372
• all were from the Big Stick (Madison) Unit, Billings County
• # of permits/wells, 10XXX and below: 47
• # of permits/wells, 11XXX through 12XXX: none
• # of permits/wells, 13XXX through 15XXX: 12
• # of permits/wells, 16XXX: 3
• # of permits/wells, 17XXX: none
• # of permits/wells, 18XXX: 4
• # of permits/wells, 19XXX: 1
• # of permits/wells, 20XXX: none
• # of permits/wells, 21XXX: 2
• # of permits/wells, 22XXX: 4
• # of permits/wells, 23XXX: 1
• # of permits/wells, 24XXX: none
• # of permits/wells, 25XXX:1
• # of permits/wells, 26XXX: 1
• # of permits/wells, 27XXX: none
• # of permits/wells, 28XXX: 1
• # of permits/wells, 29XXX: 1

******************************

29454, see above, Triangle USA, Little Muddy 9H, Williston:

Date	Oil Runs	MCF Sold
11-2015	18271	9373
10-2015	22817	13242
9-2015	15698	10540
8-2015	23991	10961
7-2015	559	578

The Obama Legacy -- The Recovery -- If One Can Call It That -- On The Backs Of Workers -- January 28, 2016

CNN is reporting:

Median wages declined in 80 of those cities between 2009 and 2014, according to a new study released Thursday by the Brookings Institution. The wage declines were more pronounced among minorities than whites. Also, the wage gaps widened between races in cities with economies that ranked high overall.

So while almost all of the top 100 cities grew and prospered between 2009 and 2014 on some measures, many struggled to create a more inclusive or stronger economy.
Only eight cities out of the largest 100 saw median wages and employment rates rise while its poverty rate fell.

"I was surprised by how few metro areas saw improvement in each of the three measures of economic inclusion," said Richard Shearer, one author of the Brookings report. The three metrics of "economic inclusion" in the Brookings report were: change in median wages, its poverty rate and its employment rate. 

So, what were the eight? As usual, that information was not provided. I assume they were Williston, Watford City, Dickinson, Stanley, Alexander, Minot, Crosby, and Killdeer, all in western North Dakota.

By the way, any increase in wages this year will not come close to matching the ObamaCare premiums now mandated for everyone.

Electric Rates Could Be Dropping Significantly, Except For One Reason: States Mandate Intermittent Energy At 10X The Cost -- January 28, 2016

Updates

January 29, 2016: this is a most incredible graphic, from the Wall Street Journal. Take some time studying it -- electricity costs, already cheap in the US, dropped another 15 - 30% in many areas of the country. But someone is going to have to ask Houston if there's a problem. Why is the price of electricity going up in Houston?

Original Post

 

From the linked story below: electricity now costs about 3.5 cents per kilowatt-hour. That compares with an average wholesale price of about 7.6 cents a kilowatt hour for 2008, when gas prices were much higher.

If you are paying more than 3.5 cents kilowatt-hour, ask your utility company how much wind energy you are paying for. Good luck.  

If you want to save a few bucks/month on your utility bill, install a $35,000 solar system on your roof. LOL. 

From yesterday's Wall Street Journal:

The lowest electricity prices in more than a decade are testing the whole business model of independent power-generation companies.

While most companies are thrilled when their fuel costs drop, plunging natural-gas prices have pushed wholesale electricity prices down to rock-bottom levels. That trend is pressuring the sales and stock prices of some of the biggest power-plant owners in the U.S.

Shares in Dynegy Inc., Calpine Corp. and NRG Energy Inc. slid more than 55% last year. So far this year, they are down between 4% and 19%. Last month NRG’s board of directors replaced longtime chief executive David Crane, hoping change at the top would reverse the company’s slippage, but there is no relief in sight.

A U.S. Supreme Court decision this week put additional pressure on generators’ stocks with a ruling that allows big consumers to receive payments for cutting their electricity use that are equivalent to what generators are paid to make electricity. 

Good, bad, or indifferent, this is what caught my attention:

The companies mostly burn coal and natural gas to generate electricity, but it is gas prices that often dictate electricity prices in places like California, Texas and the northeast. That is because the country’s fleet of power plants has dramatically changed over the last 20 years to run on more gas as coal plants have shut down due to old age and new pollution regulations. Today nearly 30% of U.S. power is generated from gas, up from less than 20% two decades ago.

The average U.S. electricity price last year fell by about a third to 3.5 cents a kilowatt-hour, according to a Wall Street Journal analysis of statistics compiled by Intercontinental Exchange Inc. In December, as gas prices hit a 14-year low, the price in some regions was even lower. In the mid-Atlantic power sold for a little as 2.7 cents per kilowatt-hour, according to federal data.

That compares with an average wholesale price of about 7.6 cents a kilowatt hour for 2008, when gas prices were much higher.

3.5 cents/kw-hour. In the mid-Atlantic, for as little as 2.7 cents/kwh. As a rule of thumb, I usually think of 6 - 9 cents / kwh. Because that's what it was back in 2008.

Solar / wind energy? You can't get an honest answer. Too many variables, but 20 - 30 cents/kwh is probably as good a number as any for intermittent energy. Remember, when you suggest otherwise, that intermittent energy needs back-up fuel energy to provide energy at night and when the wind does not blow.

So, for folks who like to pay intermittent energy, they can pay 30 cents/kwh for intermittent energy vs 3 cents/kwh for reliable energy. The only reason our utility bills are not 10x what they are is because utilities manage somehow to limit intermittent energy to only a small percentage of their overall fuel. But if you like solar/wind/intermittent energy, be prepared to pay a utility bill ten times what you are already paying.